Reading Notes on Chapters 1-3 of "Principles of Professional Speculation"
"Principles of Professional Speculation" is a classic book by Victor Sporandi. He once achieved an impressive record of investment profits on Wall Street for 12 consecutive years from 1978 to 1989 without any loss in any year. The performance is regarded as a treasure by retail investors, speculators and investors. If you want to start learning stock investment, you should list this book as an introductory book first, because the book is more about mentality and stories about how to rise and fall in the stock market. Only by reading a good book several times can you get a glimpse of the thinking state of the great speculator. As the book says: "Choose a goal, read and observe the teachings of these professionals, and practice through imitation to form your own unique style."
Chapter 1 talks about establishing a systematic The importance of basic knowledge. In addition to learning solid basic knowledge, you also need to make more connections, such as reading the market, memorizing the recent prices of different stocks, and getting a feel for the market. In addition, the author focuses on admitting losses: if at any point, the market proves that his idea is wrong, he must quickly admit losses. This point will be discussed in Chapter 2. The last step is to evaluate the risk of any speculative position by combining technical analysis, statistical methods, economic fundamentals and other factors after having a foundation. The risk/reward ratio should be at least 1:3. Here is a sentence: Many people think that the Chinese stock market is a Feng Shui stock, and technical analysis is often of little use.
Chapter 2 focuses on the crocodile principle. The concept is very simple. When you know that you have made a mistake, you should cut off your arm immediately like being bitten by a crocodile. Do not make excuses, expect, pray or take other actions... In fact, it is difficult for everyone to do this. On the one hand, If you have insufficient trading knowledge, you cannot know whether you have really made a mistake and violated the laws of the market. On the other hand, it is difficult to have the courage to bear the loss.
Chapter 3 is a consistent and successful business management philosophy: safeguarding capital, consistent profit principles and the pursuit of excellent returns. Generally speaking, if you have a principal of 50,000 yuan, you should first establish a position of 5,000 yuan, and set the loss to be between 10-20% to exit the market (guarantee capital). If it rises by 2,000 yuan, save 1,000 and use 1,000 to increase the amount ( Consistent profits), and so on, after accumulating profits, use the profit money to speculate on higher-risk securities (pursuit of excellence).
Looking at it from the above, because this book was published in 2010, many of its ideas have probably been quoted and published, so it may look a little familiar or even feel like nonsense, such as "The best way to intervene in stock collection" The ideal time is at the bottom of a bear market or the early stage of a bull market. "Of course I want to buy the bottom, but no one knows when the bottom will be, so for now I'm just going to read it as an introductory book. I haven't found any particularly amazing ideas yet. , but the three principles of speculation are still worth learning!